Barrick: Why the African names...

Buswelu · 2010-08-16T04:21:04+00:00

Interview with ....... Barrick Gold Chief Executive Deo Mwanyika About ten years since setting up camp in Tanzania, African Barrick Gold (ABG) foresees the possibility of staying longer. Tanzania appears to have a lot of gold still untapped, the firms Chief Executive Deo Mwanyika says in this exclusive interview with our Senior Business Reporter, Jaston Binala Excerpts. Question: You come across as chief executive of a giant multinational here at the local level. Judging from your name, I get the feeling you are Tanzanian; but African Barrick Gold is really a Canadian company which changed its name from Barrick Gold Corp as if for the purpose of giving it the African tint. Can you clear the fog in the make up of this company? Why do they have a Tanzanian at the top at the local level, and why a new name? A: There is a tradition within African Barrick Gold (ABG) and the parent company to reward performance and develop talent among workers. But there is also the truth that when Barrick Gold Corp sets up camp in a country, one of the considerations is to be able to provide employment to the nationals, to increase employment levels in that particular country. So all this may have played a part in what I have become. Anyway, I am Vice President in charge of Corporate Affairs for the ABG Group. I was previously employed by Barrick Gold in 1999 as its Legal Consultant and I have occupied various managerial positions in the last 11 years. The positions included Chief Legal Counsel (2003), General Manager (Legal and Government Affairs 2005-2007). In 2008 I was appointed Barrick Golds Executive General Manager in Tanzania. The leadership team is diverse and includes a good mix of individuals both new and old, and some are from outside the country. Greg Hawkins was appointed President and CEO of African Barrick Gold. He has been Chief Financial Officer for Barricks Australia Pacific business unit since 2006. He has two decades of mining industry experience, including 10 years in various finance roles with Barrick. Kevin Jennings is the Chief Financial Officer. He was previously Head of Strategy and Business Analysis for Barrick in Africa, and VP Corporate Development for Barrick Gold Corporation. Dave Anthony is the Chief Operating Officer, responsible for mining operations. Peter Spora remains Vice President in charge of Exploration while Cassie Boggs Interim General Counsel. Q: Considering that the company has been in the country for a good period now, what will this change mean for mine operations and the employees statuses in Tanzania? A: Considering that African Barrick Gold inherits its parent companys operations in the country, it is correct to say African Barrick Gold has been in Tanzania for over 10 years; the Bulyanhulu mine was acquired in 1999 and construction was completed in April 2001. Tulawaka Gold Mine commenced construction in 2000, but began to pour gold in March 2005. The North Mara Mine was acquired as part of the Placer Dome takeover in 2006. The Buzwagi Gold Mine commenced operations in April 2009. At the individual mine site level; operations will continue as before to focus on gold production and on-going continuous improvement. Front-line employees will not see any change in the day-to-day operations. The change will be in the approach to planning and strategy at the regional and company level. Operations in Africa are now a separate company called African Barrick Gold. By grouping African operations into a separate company, the new entity has the ability to issue shares and raise capital. Q: What is your working relationship with the parent company? A: Our relationship with Barrick Gold Corporation is well defined: Barrick Gold Corp retains approximately 75 per cent ownership of African Barrick Gold, and is the major shareholder. African Barrick Gold has service agreements in place with Barrick to provide certain services such as marketing, insurance, information technology, technical services, security and other administrative or corporate functions. ABG will benefit enormously from the insight and technical services that Barrick Gold Corp provides, and from association with Barricks reputation as the gold industry leader. Q: Are there any unknown developments at African Barrick Gold (which I have not asked you about) that you feel free enough to share with us? A: Yes. In February 2010, all Barrick Gold assets in Africa were consolidated into a new company, African Barrick Gold (ABG). The new company is Africa focused--with a mandate to pursue growth in Tanzania and Africa as a whole. African Barrick Gold consists of the Bulyanhulu Gold Mine, Tulawaka Gold Mine, North Mara and Buzwagi gold mines in Tanzania and a number of exploration properties. In March 2010, ABG got listed on the London Stock Exchange (LSE) and is currently pursuing listing on the Dar es Salaam Stock Exchange. Total net proceeds of the London offering were USD882m. Parent company Barrick Gold Corporation retains a 75 per cent shareholding in ABG. In May 2010, ABG reported first earnings which revealed a 143 per cent increase in first quarter earnings of USD100m, compared to USD41m of the previous year. Q1 net earnings increased 356 per cent from USD12m in 2009 to USD53m in 2010. ABG is already the largest gold producer listed on the LSE, with the largest reserves and production in Africa. In June 2010, ABG was promoted to the FTSE 100, a prestigious tagging placed on companies doing very well on the LSE. It might also be good to note that in May we completed the acquisition of Tusker, which represents a future mine potential. Beyond that we have a mandate to expand throughout Africa. We have the capital and we have the technical know how to do that. ABG is also investing in developing new production in existing mines, for example we have dedicated USD150m in capital expenditure in 2010. Concerning the Kabanga projects feasibility study, questions regarding the project should be sent to Xstrata because they take the lead in that project. Also you should note that ABG holds no interests in the Kabanga Nickel project. At present we are also doing exploration which may extend mine life at the various mine sites we operate. Tulawala is for example a mine where there is high probability that mine life will be elongated for a number of years. Q: What challenges have you come across and how have you braved them? A: One of the biggest challenges is to go into a country that didnt have a mining industry. We have had to invest in building understanding of the industry, establishing necessary skills to support a fast growing sector. We have made significant progress. Right now over 90 per cent of ABGs workforce is made up of Tanzanians. The Victoria Gold Belt, where significant gold reserves lie is in rural regions of Tanzania, where theres little or no infrastructure. ABGs investments have included significant development of infrastructure including, water, electricity and roads. In overcoming the challenges, African Barrick Golds strategic approach is to seek and establish partnerships with key stakeholders in related areas. Through these partnerships we are able to invest in research, capacity building and infrastructure development. I will give examples: African Barrick Gold has invested USS2m to establish the Integrated Mining Technical Training institute (IMTT) in partnership with the Tanzania Chamber of Minerals and Energy to address the lack of local tradesmen for the mining sector. To address the energy supply shortage, ABG has invested over USD100m on power line projects over five years. These projects have delivered close to 100KW to the national power grid and speeded up the rural electrification project. These assets have been handed over to the state owned Tanzania Electricity Supply and Company. In collaboration with CARE International, ABG invested in a six year project some USD2m to support education in Kahama district. Q: What is the status of your intention to list on the DSE? A: We are moving ahead cautiously. But we have begun the process which will lead to discussions with the Capital Markets Authority in Tanzania. At this point it is too early to establish a timeline but we are eager to see Tanzanians participate in this sector. Q: After the long period of time here, do you believe Tanzania, and Africa in general, is still mining friendly? A: There is increasing receptiveness for the industry among African governments. We see African governments putting in place legislation to provide solid framework for investment. This supports the geology which is very attractive in areas of Africa and many have not yet been explored. Q: Do you see any discrepancies in the original spirit of the Mining Act of 1998 and the new one? And what do you believe should be done to rectify the posture? A: The new mining act is a response to challenges faced and experience gained during the 12 years of the implementation of the 1998 Mining Act. So the objective is the samewhich is to have in place a law that balances benefits of the people and the interests of the investors. The challenge lays in striking a balance, so that you dont send a negative signal to investors and to negatively impact foreign direct investment. Q: There have been repeated complaints directed to your company, suggesting that you make a lot of money and pay peanuts to Tanzania. What is your reaction? A: It is true that many share that perception but that is all it is --just a perception. In reality we pay taxes, levies and royalties and report this information in our Annual Financial Report which is readily available on our website. ABG impacts the economy on so many different fronts to a point where it is challenging to trace every dollar. For example if we are to look at 2009 alone, ABG paid over USS74m in direct taxes, we invested over USD5 million in community projects alone; on infrastructure we financed USD70m on the national electricity grid. Now, that is just one front, if you look at the amount of goods and services we procure in Tanzania, the numbers also tell a big story. In 2009 ABG purchased goods and services worth USD337, 457,594, of which over USD193m were goods and services purchased from Tanzanian registered and owned companies. This is a significant amount of money paid to companies that are based here, firms that employ local people and are tax payers; this should give you a glimpse of the ripple effect our business has on the economy. Q: What is your position on the Extractive Industry Transparency Initiative (EITI) in Tanzania? Is it a good thing? Do you support it? A: ABG supports improved governance through the full publication and verification of government revenues generated by mining. We endorse the Extractive Industries Transparency Initiative (EITI). We are members of the International Council on Mining & Metals (ICMM), who handles financial contributions to the EITI International Management on behalf of all their members. SOURCE THE GUARDIAN. My Take:Mtu aje na data zingine different na za bwana huyu ili tuweza kuwa na base of argument...

Thread starter Buswelu
Start date Aug 16, 2010

Buswelu

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Barrick: Why the African names...

Buswelu

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